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Cartel

Cartel Definition

A cartel is a group of producers whose goal it is to fix prices, to limit supply and to limit competition. Cartels are prohibited by antitrust laws in most countries, however they continue to exist nationally and internationally.

In general, cartels are economically unstable in that there is a great incentive for members to cheat and to sell more than the quotas set by the cartel (see also Game theory). This has caused many cartels that attempt to set product prices to be unsuccessful in the long term. However, once a cartel is broken, the incentives to form the cartel return and the cartel may be re-formed. Publicly-known cartels that do not follow this cycle include the Organisation of Petroleum Exporting Countries (OPEC) petroleum cartel and the De Beers diamond cartel.

As its name implies, OPEC is organised by sovereign states. It escapes antitrust enforcement in other jurisdictions by virtue of the doctrine of state immunity under public international law.




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